INVESTMENTS

3 Months Ended

Mar. 31, 2023

Equity Method Investments and Joint Ventures [Abstract]

INVESTMENTS

10. Investments

(a) The Company previously held a 50% ownership interest in ENP Peru, split between NanoChem (41.67%) and ENP Investments (8.33%), which was acquired in fiscal 2016. ENP Peru is located in Illinois and leases warehouse space. In June 2022, NanoChem acquired an additional 50% ownership interest at a cost of $506,659 paid through a new $259,000 mortgage and cash on hand. The 35% non-controlling interest of the 8.33% owned by ENP Investments is included in non-controlling interest in these consolidated financial statements. The Company’s investment in ENP Peru was previously accounted for using the equity method, however, is now consolidated into the consolidated financial statements from the date control was obtained.

It was determined that ENP Peru did not meet the definition of a business in accordance with FASB Codification Topic 805, Business Combinations (ASC 805), and the acquisition was accounted for as an asset acquisition. The following table summarizes the final purchase price allocation of the consideration paid to the respective fair values of the assets acquired and liabilities assumed in ENP Peru as of the acquisition date. The gain on acquisition of ENP Peru represents a gain on remeasurement of the Company’s equity method investment immediately prior to the acquisition date.

Purchase consideration	$	506,659
Assets acquired:
Cash		7,330
Building		3,750,000
Land		150,000
Liabilities assumed:
Deferred tax liability		(174,582	)
Long term debt		(2,849,500	)
Total identifiable net assets:		883,248
Excess of assets acquired over consideration		376,589
Less investment eliminated upon consolidation		(41,538	)
Gain on acquisition of ENP Peru	$	335,051

A summary of the Company’s investment follows:

Balance, December 31, 2021		22,642
Return of equity		(8,750	)
Gain in equity method investment		27,646
Investment eliminated upon consolidation		(41,538	)
Balance, December 31, 2022 and March 31, 2023	$	-

(b) In December 2018 the Company invested $200,000 in Applied Holding Corp. (“Applied”). Applied is a captive insurance company and the Company received a non-convertible promissory note for its investment which becomes due in 2021 but may be extended with notice for a maximum of two years. During the year ended December 31, 2021, the Company entered an agreement with Applied to extend the maturity date of this promissory note to December 6, 2023. In accordance with FASB Codification Topic 323, Investments – Equity Method and Joint Ventures (ASC 323), the Company has elected to account for this investment at cost.

(c) In December 2018 the Company invested $500,000 in Trio Opportunity Corp. (“Trio”), a privately held entity. Trio is a real estate investment vehicle and the Company received 50,000 non-voting Class B shares at $10.00/share. In accordance with FASB Codification Topic 321, Investments – Equity Securities (ASC 321), the Company has elected to account for this investment at cost. See Note 18.

(d) In January 2019, the Company invested in a Florida based LLC that is engaged in international sales of fertilizer additives. The Company accounts for this investment using the equity method of accounting. According to the operating agreement, the Company has a 50% interest in the profit and loss of the Florida based LLC but does not have control. A summary of the Company’s investment follows:

Balance, December 31, 2021		3,701,368
Gain in equity method investment		307,527
Return of equity		(250,000	)
Balance, December 31, 2022	$	3,758,895
Gain in equity method investment		69,995
Balance, March 31, 2023	$	3,828,890

Summarized profit and loss information related to the equity accounted investment is as follows:

	Three months ended March 31, 2023		Three months ended March 31, 2022
Net sales	$	3,447,125	$	2,201,518
Gross profit		965,052		512,884
Net income		139,990		73,528

During the three months ended March 31, 2023, the Company had sales of $1,778,897 (2022 - $1,672,200) to the Florida based LLC, of which $1,470,846 is included within Accounts Receivable as at March 31, 2023 (December 31, 2022 - $2,423,285).

(e) In December 2020, the Company invested $500,000 in Lygos Inc. (“Lygos”), a privately held entity, under a Simple Agreement for Future Equity (“SAFE”) agreement. Lygos is a company developing a sustainable aspartic acid microbe strain. In 2021, the Company made a second SAFE investment of $500,000 for a total of $1,000,000. In accordance with ASC 321, the Company has elected to account for this investment at cost.